Forex Chart Formation Patterns_7. Learn Forex Falling Wedge Pattern

Lesson 7: Learn Forex Falling Wedge Pattern

When there is a bullish formation pattern in which the price exhibits lower lows and
lower highs, it is known as a falling wedge. The resistance line is steeper than the
support line.
Every new low that is created with the loss of momentum is signaling underlying
strength. There are two basic variations of this pattern.
The first one is a bullish reversal pattern and it looks like this: the downward trend
will result in lower lows and the highs will also get lower, due to which, momentum is
lost. As a result, the price struggles to recover until there is a bullish sentiment, and
the price breaks beyond.

The second variation is a bullish continuation pattern. It forms following a strong
up-trend as the price retraces lower. Since the main trend is still bullish, there’s no
momentum behind the bearish moves and eventually the price breaks out towards
the upside to resume the bull trend.
The price target for this formation should be the height of the wedge, measured up
from the breakout point.